Payment Gateway Arbitrage
Save ₹5,000-7,000 per $1,000 received
What is This Hack?
Switch from PayPal (6-8% fees) to Wise/Karbon (0.5-1.5% fees) to save ₹5,000-7,000 per $1,000 received, compounding to lakhs annually
How It Works
Most freelancers default to PayPal for international payments, but it charges hefty fees: 4.4% transaction fee + 3-4% hidden forex markup = total 6-8% cost. For $1,000 received, you lose $60-80 (₹5,000-7,000). Modern alternatives like Wise (formerly TransferWise), Karbon, Skydo, and Vance charge 0.5-1.5% total - 5-10x cheaper. These platforms use mid-market forex rates with transparent fees. The savings compound massively: if you earn $50,000 annually, PayPal costs you $3,000-4,000 (₹2.5-3.3 lakhs) whereas Wise costs just $250-750 (₹20-60K). The difference: ₹2-3 lakhs saved every year with a simple switch.
Real Example: Freelance Designer Earning $3,000/month
Situation
Neha is a freelance graphic designer receiving $3,000 monthly ($36,000 annually) from US and UK clients via PayPal.
Without This Hack
PayPal fees: $3,000 × 6.5% average = $195 per month = $2,340 annually (₹1.95 lakhs). Net realization: $33,660. Exchange rate: ₹83/$ (PayPal rate). Total INR received: ₹27.9 lakhs.
With This Hack
Using Wise: $3,000 × 0.8% = $24 per month = $288 annually (₹24K). Net: $35,712. Exchange rate: ₹83.50/$ (mid-market). Total INR: ₹29.8 lakhs. Savings: ₹1.9 lakhs annually + better forex rate = ₹2+ lakhs total benefit.
💰 ₹2+ lakhs saved annually just by switching platforms
Common Pitfalls to Avoid
- Some clients may be unfamiliar with Wise/Karbon - educate them that it's like PayPal but cheaper
- Initial setup takes 2-3 days for KYC - plan transition in advance
- Keep track of purpose codes (P0802 for software, P0803 for services) for RBI compliance
- Don't use personal accounts for business - maintain proper documentation
- Platform platforms have transfer limits initially - increases with usage history
- GST still applies if registered - this hack saves payment fees, not GST
Prerequisites & Requirements
- Freelancer/consultant receiving international payments
- Valid PAN card and Aadhaar
- Indian bank account (savings or current)
- Passport (for international verification)
- GST registration certificate (if applicable)
- Stable clients willing to update payment details
Key Benefits
- Potential savings: ₹50,000-2 lakhs annually
- Implementation time: 1 day
- Legal status: fully legal
- Risk level: low
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Step-by-Step Guide
Calculate Current PayPal Losses
Use our Payment Gateway Net Realization Calculator. Enter your annual receipts. See how much you're losing to PayPal fees (typically 6-8% total).
Choose Alternative Platform
Compare: Wise (0.5-1% fees, best for regular transfers), Karbon (0.99% fees + benefits), Skydo (business-focused), Vance (startup-friendly). All are RBI-authorized.
Complete KYC
Sign up with chosen platform. Complete KYC: PAN, Aadhaar, passport, GST certificate (if registered), bank account proof. Approval takes 1-2 days.
Get Your Account Details
Receive multi-currency account details (USD, EUR, GBP accounts with local routing numbers). Use these like local bank accounts in those countries.
Update Client Payment Details
Share new payment details with clients. For US clients: ACH/Wire to your USD account. For EU: SEPA transfer. Clients pay as if you're local - zero fees on their end.
Receive & Convert
Funds arrive in your USD/EUR account within 1-2 days. Convert to INR at mid-market rate (0.5-1% fee). Money lands in Indian bank account in 1-2 days. Auto-generated e-FIRA for compliance.